George v. Murray

Seabury, J. This appeal presents for determination the legal sufficiency of the alleged defense and counterclaim pleaded in the answer. The cause of action alleges that the plaintiff’s assignor, one Galloway, was induced by the fraudulent representations of the defendant to become an indorser upon a promissory note signed by the defendant, that the defendant failed to pay the note and that the plaintiff’s assignor was compelled to pay the same. The answer alleges a cause of action in contract on behalf of the defendant against plaintiff’s assignor. The court below, by refusing to sustain the demurrer to the counterclaim, has held that it was sufficient. It is clear from a reading of the complaint that the cause of action is not upon the note but for damages caused by the false and fraudulent statements alleged to have been made by the defendant to plaintiff’s assignor to induce him to become an indorser thereof. Such a cause of action is assignable (Keeler v. Dunham, 114 App. Div. 94), and it does not follow that because it was assigned by Galloway to the plaintiff it thereby became or was. intended to become, ex contractu. The defendant’s separate defense and counterclaim is one for breach of contract [177] against plaintiff’s assignor and is not one permitted by section 501 of the Code of Civil Procedure, “ as it is not a cause of action arising out of the contract or transaction set forth in the complaint as the foundation of the plaintiff’s claim or connected with the subject of the action.” Order reversed, with ten dollars costs and disbursements, and demurrer sustained, with costs. Bijur and Cohalan, JJ., concur. Order reversed, with ten dollars costs and disbursements.